Dhirendra Kumar of valueresearchindia.com feels that it is not the time to look at any sectoral or thematic fund because the kinds of variables in the markets can be very unnerving. He said, "An investor should at this point be anchored to a diversified equity fund and in fact most investors should be anchored to a diversified equity fund during all times. One should look at a thematic or sectoral fund only when one has a medium or short-term time horizon."

On Mutual Fund Products:

From an investor’s point of view, insurance is a far more important goal, which should be taken care of before you start investing. The moment you are dependent, you should look for insurance and should adequate insurance coverage. The other principal most investors should follow is that it is not a good idea to mix insurance and investments. That is why ULIP is a bad idea simply because it mixes things in a manner which you have. It doesn’t help you achieve your investment goal or your insurance needs completely and in a very objective fashion because the insurance coverage needs changes with time.

The moment you are dependent, you need large insurance coverage which cannot be adequately met with ULIP for anybody getting started without paying a big premium and besides that the cost, liquidity and the transparency makes ULIP a very bad choice. Investors should not consider it just for the sake of insurance. Investors should look at it as something that you are getting for free, a very meaningful coverage without any cost or barrier. If you don’t like your investment or you want to get out of it and you want to stop investing, you can do that any time.

So, the whole profitability and invest ability offered to the investors might be welcome, and to get Rs 20 lakh worth of coverage as add on without any cost by making SIP into a fund will be chosen by you anyway. A Birla Fund as an SIP, or a Reliance Fund are good enough to be chosen because it is a reasonable or compelling choice. If you have insurance in need, which is unfulfilled, then you should go for it simply because it comes without a cost virtually, or any constrain. Choosing a diversified equity or a balanced fund is entirely a function of your needs for stability and how much can you absorb and your time horizon.

On Infrastructure funds :

I am quite downbeat on the infrastructure funds. I don’t expect these funds to do very well in recent future and they may do well in a three-five year time horizon. That is simply because of what all has happened. The whole complexion of the economy has changed. There has been over ownership of these stocks by the institutional investors including the domestic funds and due to what has happened like the interest rate cycle, the way it has turned around without much of a notice and also the political formulation changing. All these things will contribute to deceleration of the whole sector and interest rate will particularly hit the bottomline of some of the key companies.

If we are talking of infrastructure, the top six companies account for nearly 70% of the total momentum we had seen. Companies like BHEL and L&T driving it will be affected. I don’t think that you should write off. But also the whole story, that made it compelling, has been dented and the outlook is very poor.

On Sectoral funds:

It is not the time to look at any sectoral or thematic fund because the kinds of variables in the markets can be very unnerving. Investors globally are very scared of banks today even though the Indian banks may not be as badly shaved as they are being made out to be simply by what is happening with their prices.That could be quite scary.

An investor should at this point be anchored to a diversified equity fund and in fact most investors should be anchored to a diversified equity fund during all times. One should look at a thematic or sectoral fund only when one has a medium or short-term time horizon. If one is excited about a sector, wants to capitalize on that and want a vehicle of targeted diversification because one cannot choose that stock then go ahead and do it.